Are the Chinese clever with the fixed yuan rate?

China decided to allow its currency to strengthen by 0,5% more, after widening the trading gap of yuan to 1%. This is the response to the global pressure for removing this export-advantage that helps its economy to rise faster by selling goods cheaper and attracting investors with lower expenses (mainly - labor). In fact, China is doing nothing, just as has done the same for years. So small currency changes can influence only speculators on FOREX market, but not the real economy.
But are the Chinese more clever than EU and USA, or not so much clever?

I think it is the second one. By fixing the yuan to dollar, China de facto dollarizes its economy and subordinates it to the US economic policy. In last few years USA is stripping the China economy by buying goods in exchange for... nothing. USA is paying with constantly printed new dollars that are in devaluation spiral against base resources. China takes these dollars, puts them in People's Bank of China and keeps them there to guarantee the yuan will not go up. The result of this is that China is working for USA with de facto no pay.
So when US politics are criticizing China for the fixed yuan rate, they are missing to mention that this system is a good deal for USA, at least in short term. In fact Americans are consuming much more than they are producing, due to China generosity of accepting more and more dollars for its real products.
Keeping low currency rate is good for exporters, but is not good for the economy at all. The export is only a part of the economy, that has other parts too. A stable and progressing economy is the one that works well as a whole, and not the one that has some isolated strong branches.
China is a potentially enormous market whit its 1,3 billion population. But developing the internal market is ruined by the fixed exchange rate that slows the rising of salaries of workers. In fact it is possible the salaries even to go down as a real purchase power, because of the imported inflation. When FED is printing money and Bank of China is exchanging them for yuans, this imports a dollar-generated inflation in China. And the inflation ruins the wealth of Chinese people, that are intended to become a mid-class.
Chinese internal market can be bigger than the US one, if the average living standard reaches 1/4 of the American one. This is because the population of China is more than 4 times bigger than the population of USA. And if we assume one day an equal living standard, then the internal China market will be 4 and up times bigger that the market of USA. The same market that now China relies on for its current economic growth.
So in fact China is ruining much bigger potential market in an effort to keep the American market. Is that clever?
I don't think so. I think Chinese leaders are short-sighted and they are sacrificing the big profit for a small current advantage. I think that every strengthening of yuan (a currency of real working people) against the dollar (that more and more is becoming a currency of administrators, bureaucrats and social system consumers) is good for the people of China and for its own economy. Every more precious yuan will create more consumption in China than the eventually lost market in USA.
So what is more clever? To develop the new and big market or to keep the old and exhausted one?

Dobri

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